The Johannesburg Stock Exchange (THE JSE) has launch its Green Bond Segment which provides a platform for companies and other institutions to raise funds ring-fenced for low carbon initiatives and investors to invest SRI funds in securities that are truly green.
The global market for green bonds is currently valued at around USD895 billion dollars and year-on-year issuance has doubled in size annually over the past two years.
The JSE has aligned its JSE Green Bond listing requirements in line with international best practice but kept it in context of the South African economy to include specific rules pertaining to green bonds. This includes that institutions which issue a green bond appoint an independent reviewer to confirm that the bond can be classified as green according accepted industry standards.
The JSE also requires green bond issuers to disclose the proceeds generated through issuing the bond as well as how these funds are applied throughout the lifetime of the bond. This ensures that the capital raised is applied to the green projects it is earmarked for to give investors comfort the funds are applied in line with the issuers intentions of raising a green bond.
The City of Cape Town green bond, which is already listed on the JSE’s bond market, was certified by the Climate Bonds Initiative, while international ratings agency Moody’s also awarded it an excellent GB 1 rating.
The projects to be funded by the green bond are a mix of adaptation and mitigation initiatives and include the procurement of electric buses, energy efficiency in buildings and water management initiatives like water meter installations and replacements, water pressure management, and the upgrade of reservoirs. The City raised ZAR1 billion for these projects when it issued the 10- year bond in July this year.